FedFinancial Strives to Help Homebuyers with New App

The housing market continues to be tricky to navigate for many homebuyers. Many people are shopping, but there are still not enough houses to go around. At the same time perspective homebuyers are having to deal with inventory issues, many are having to deal with getting the financing they need. First-time homebuyers especially are having a hard time entering the market and finding the tools they need to succeed.

Sarah Snell Cooke had a chance to talk to FedFinancial Credit Union CEO Jon Rhodes and Mortgage Markets CUSO CEO Mike Ferraro to discuss the new MCUSO Home Journey app and how it can help homebuyers succeed to today’s home marketplace, whether they’re a first-time homebuyer or a long-time owner looking to sell.

Read the full transcript below:

Disclosure: Transcript is automatically generated

Sarah Cooke  00:00

Welcome to The Credit Union Connection. My name is Sarah Snell Cooke. I am here with John Rhodes, CEO at Fed Financial Credit Union. Welcome.

Jon Rhodes  00:30

Welcome. Thank you, Sarah. It's nice to see you. Great

Sarah Cooke  00:34

to see you maybe in person again sometimes. And I also have Mike Ferraro, who is the CEO at Mortgage Markets CUSO. Welcome.

Mike Ferraro  00:45

Hey, sir. How's it going, John, good to see you again.

Jon Rhodes  00:48

Good to see you, Mike. Thanks. Thanks

Mike Ferraro  00:49

for having me. Excellent.

Sarah Cooke  00:51

So yeah, we're all peachy here. Right. So let's start with the big question that is on everybody's mind that has to do with mortgages and how homeownership and whatnot. Because personally, I sold my house in March, and I still haven't bought one and I'm not gonna buy one for a while yet. So housing market is nuts. availabilities, tight. rents are high. You know, interest rates are ridiculous for historical recent history anyway. Mike, why don't you talk a little bit about what you're seeing at the national level? And then John, I want to hear about your area and what's going on in your neighborhood.

Mike Ferraro  01:27

Yeah, you know, there's a lot of optimism, Sara, with rates being so high last year where they were, I think maybe it was October, when they hit their peak of 8%, or near there. People were waiting, and they were waiting on the sidelines. Because as we all know, the mortgage rates at some point would come down, right around the middle of December, when the Fed met, and they said Ah, we're not going to raise the rates, or we don't think we're gonna raise the rates, and 24, the rates kind of plummeted. And people are coming back into the marketplace. So activity has absolutely increased. People are looking to get pre approved. we're even seeing some refinances. I think the unknown is the mortgage industry and markets just so vulnerable right now. And John and I talk about this all the time. They're just when you think there's optimism, just when you think, you know, the consumer is getting back into the marketplace, something happens in this world, right? And boom, the rates go up so quickly. And it's just an end to consumers come back on the sideline and wait. So, John, I don't know if you're seeing the same thing. But I'm seeing kind of that, you know, yes, they're going, they're getting pre approved, they're applying them, they stopped, they're going they're getting pre approved. So there's just a lot of inconsistency right now.

Jon Rhodes  02:42

You know, we've seen a lot of that, but we have a lot of members that have been approved for some time pre approved. Yeah. And they are finding that their bids are not being accepted. Because there's very few houses available on the market. They're bidding, but they're not being accepted. Although lately, we've seen more houses coming onto the market in our area. And that's allowing some of our members to finally win the bids, and close on their new home. You

Mike Ferraro  03:18

know, Sarah, John makes a good point. I remember, maybe it was the beginning of last year when the rates weren't so high. The big thing in the industry was inventory. People were getting pre qualified, they were calling me saying they couldn't find a house, they were going to open house on a Sunday or Saturday, and there was a line of 30 people and people are coming in with cash, they were getting outbid. So that's a good point. Even if the rates come down to levels where we think hopefully they'll come to that inventory issue, the affordability to even find that house that that's still out there. And there's a lot of unknown to that. There really is.

Sarah Cooke  03:55

Yeah, part of the reason I'm sorry. I was gonna say part of the reason I'm trying to move to South Carolina is because the affordability of housing and among it, you know, plus I don't like snow, but

Jon Rhodes  04:12

I don't like it either. So can I move down with you?

Sarah Cooke  04:16

Sure.

Mike Ferraro  04:18

You know, I don't want to keep going but how can you know if Michael Ferraro was a first time homebuyer going into the marketplace today, right? Think about it right? And I'm going to an open house on a Sunday with 30 people 40 people and they're over bidding by 10,20 $30,000. Nowadays, it's common. It's almost taking that first time homebuyer completely out of the marketplace still, until we kind of right size this.

Sarah Cooke  04:42

So, my, my son, we were talking earlier, this family you know, they're paying Oh god, it's ridiculous like $1,800 in rent for not a great place and not a great area. And um, You know, they could be paying that mortgage, but they're not gonna get approved, you know, and they're not gonna be able to outbid somebody who, you know, is more established or has already had a home that they're gonna put the next one. So yeah, it really is putting people out of the market, which is sad. It really is one

Mike Ferraro  05:17

other point I'll say on this to John, I don't know if you can think about, I think I have the statistic I can't find it. But during COVID, you know, kind of the timeframe when it first came out and the refinance boom, and people refinancing it to 993 percent. I think they said it was like almost 80% of people refinanced into that rate. I still say those people, Sarah, if you're in a home at two and a half or 299, are you going to move for six and a half? 7%? Probably have to right? Yeah, only There you go only if you have to. So we still have a lot of the marketplace that's still going to be on the sidelines, even though there's optimism, right? A lot of people are in those rates. Those fixed rates for until the rates get near the fours maybe or high threes. I just don't think they're going to be moving. But

Sarah Cooke  06:09

I was reading something. Yeah, I was reading something the other day that from an economist that the Fed may not lower rates for a longer period of time based on some of the comments they made at their last meeting, as well as like, I think the jobs report was stronger than expected. So yeah, we don't even know when that slower decline. And then of course, it's a lagging, lag. Lag, too, so. So what do you see happening in 2024? Then we talked about the fire dumpster that are dumpster fire, excuse me, that was 2023 in the housing? What about 2024? What's going to happen? Well, I

Mike Ferraro  06:47

can tell you this right now, we definitely we've had about a 30% increase in applications. And people are very jazzed up to get pre qualified to find a house. So I think we're seeing that optimism, and the consumer is shopping, we'll see how that kind of translate into the, you know, the spring markets, kind of the telltale, right? People going to the spring, we'll see where those rates go. If they stay where they are, I think people are going to be optimistic. Um, I still say, I try not to have a crystal ball with this industry, because you just don't know. Right, John, like you just you think just when you think you're getting optimistic, something might happen. But I am feeling pretty good right now about it. From what I'm seeing.

Jon Rhodes  07:29

I think the key word that you keep using is optimistic. And I think consumer and our members are getting more optimistic, and they're trying to participating, they're making more bids, instead of saying, I don't have a chance. The problem with the younger generation Gen Z is, you know, it's a very difficult situation when you are not well versed in the mortgage industry. And here you have 10 other people that want to buy the same home that you do, and you don't even know if you can afford it. And you're not sure what you should bid and you have a real estate agent that might be working for you, but also is looking out for their own interests. It's very tough for younger people in this market right now. And I think it's still going to be tough. I think it's gonna be better than the worst of 2023.

Mike Ferraro  08:23

Are you seeing the increase? Like we're seeing John, like an uptick in applications or interest? Definitely,

Jon Rhodes  08:27

yes, we're seeing uptick in applications, and we're just having more borrowers constantly communicate with us. Great. Yep. Good.

Sarah Cooke  08:39

Yeah. And, John, I don't think we mentioned earlier, you're in the DC Baltimore area is the field of membership you serve? Yes. And my credit union I'm on the vice chair of APL Federal Credit Union, which is not far away in Laurel, Maryland. And yeah, we've definitely seen an uptick in in applications as the car loans have gone down, unfortunately, more are going up. So anyway, so John, you reached out to me, because you're working with Mike, on this first time homebuyer webinar. What are your members asking for in this area? What are you looking to get out of that?

Jon Rhodes  09:18

Well, what some of our members want a subset of our members and and they are a lot of our members, family members want is education on how to buy a home, when to buy a home, if they're ready. How should they deal with what does it what impact will that have on their budget? And yet we haven't had a tool that was easy to give them to help educate them. And so, Mike, approached me with a tool that I looked at and said, This is really perfect for people who want to learn about the mortgage market, they get themselves prepped for buying a home, and actually make a deal that works for them, and not take a deal that they can't afford or doesn't work for them. And so I, you know, the Home Journey app, it's just something to behold because it gives so much information. And really what credit unions, you know, our bow is providing better deals to their members. And this allows the members or potential members to know what a better deal is.

Sarah Cooke  10:42

Yeah, that is so helpful. I imagine because, you know, getting into a house, you don't know, like, the cost of home repairs and stuff that you don't think about when you're a renter, right? Yes.

Jon Rhodes  10:55

Or you don't really, you know, you, like you said, your son is renting, and he might be renting for close to 2000 a month, he might be able to borrow for $1,600 a month, but he doesn't realize that that $200 or $400, difference will quickly be eaten up the first time he has a plumbing problem, or something of that nature,

Sarah Cooke  11:17

or he's calling dad.

Mike Ferraro  11:21

You know, sir, I was telling John, this a few weeks ago, when I bought my first home, I didn't know where to begin. You know, I really didn't. I mean, I didn't understand the pulling of credit, right, or what that meant, or getting new credit, or debt to income, or PMI, or any really all the different things. So with our MCUSO Home Journey app, which is it's free for Fed Financial members, right in the App Store or Google Play store, you can download this app. And it can help you, as John mentioned, educate you, as you go on that journey to buy your home. It tells you your credit, as you go along, it gives you educational type of videos to help you understand the different acronyms right. As you move towards applying, you can communicate directly with us and or John and his team. So when you have questions or concerns, you can email or set up appointments. Too many people in credit union world, when they're interested in a home, they call a competitor or somewhere else and they go outside of the credit union. Right, John? And I want to keep those homebuyers in the credit union and be able to answer their questions, educate them. So when they are ready for their home, Sarah, they can come back to John and John can you know help facilitate that and get them below. So

Jon Rhodes  12:40

not only does the Home Journey app, do exactly what you said, Mike, but it also provides a financial foundation for for people because it will take from, it'll download the information from their checking accounts that they have. And it'll show them and allow them to create a budget, it'll show them where they're spending the money. And what they will need to have ready to make payments on a new home, and where they might have to modify their spending. It also tells them what they're going to need for a down payment and closing costs and everything for the type of home that they might want based on the price. And it's just unbelievable. It helps them not even with just buying a home, but by making a budget and having a budget and understanding where you spend your money.

Sarah Cooke  13:34

Right. And that's that's what I like about when I was poking around with this. It's not just talking at you, right? It's literally working with you because you can aggregate your accounts into there and figure out exactly as John was saying, and truly a personalized plan to get on that on that path. So Mike, are you doing a lot of these type of educational seminars with credit unions across the country?

Mike Ferraro  13:56

Yeah, yeah, it's top of mind, Sarah. I mean, credit unions again.

Sarah Cooke  14:02

What are you hearing from the members?

Mike Ferraro  14:24

Yeah, absolutely. You know, it's for our CUSO. it's a differentiator, right. I am passionate. Sarah, and John knows this about helping the credit union member and doing these seminars quarterly, you know, monthly for credit unions as they want, right? They kind of come to me and they'll say, Sir, hey, I want to do this monthly, or I want to do this quarterly. It just continues that education as we go, and a lot of these credit unions nationally are reaching out to me because they need to when they want to provide a service like this. A lot of credit unions today. Let's be honest, if you walk into it, what do they have for the first time homebuyer, they might have something on their website that might connect with a loan officer, they might say, oh, yeah, you know, we'll give you a $500 closing cost credit, you know, that type of thing. There's no education and

Sarah Cooke  15:11

You don't even know what a closing cost is.

Mike Ferraro  15:14

It's a good point as John mentioned. So that's why I'm doing these seminars that we just did one for John, very successful educating them right kind of about the app, and the process is key and the credit union's so far gravitating to it and really loving it. And John,

Jon Rhodes  15:29

yeah, we do it on demand, we actually have a link to the educational video conference that Mike conducted on our webpage so people can go when they want to learn how to use the app, learn how to maximize the value. You know, and when we're talking about things that young people don't know, young people do not know about escrows. There's so many things they don't know about, and this app is going to help them. I mean, people say, you know, when I first first house, I bought when I said you're going to take nine months or six months of my homeowners association, my insurance fee and all that. And I have to pay that upfront. I didn't know that. That was a surprise to me. And it's definitely a surprise to young people.

Mike Ferraro  16:23

Here's the other thing that I have to mention, too. Let's go back 10 years ago, right, John? What was a first time homebuyer after the branch closed? At 5:30, right, you get some cider and some doughnuts, and you have six people in there, right? And you might do any type of fees. And you're there till seven o'clock. This is the new world. This is the this is the first time home buying seminar right on steroids per se, where they can have it all the time in their hands constantly going. This isn't the way this is where credit unions are pivoting finally, you know, into kind of the FinTech new world, not the old way of doing things. So good point that you made earlier. Yeah.

Sarah Cooke  17:06

Yeah, one of the things I'm hearing from a lot of credit union business partners is they partners that work with both banks and credit unions, they started they're saying credit unions are much more adapting much more quickly than a community bank. So yay credit unions! 

Jon Rhodes  17:21

Because I think that's because it's easier to steer a small boat or a smaller boat than it is a giant ship, like these big banks that they have to make a big giant turn to do something, we can react to the environment. And this is one way we're reacting to the environment. Yeah, definitely

Sarah Cooke  17:41

an advantage of being a credit union. That that isn't one of those big giant shifts. I mean, people talk about, oh, we're too small to survive BS. I call BS, you're just perfect to survive. If you do it. Right. You do it, right. Yeah.

Jon Rhodes  17:57

And we're the most flexible of any organization and the financial institution. So John, John,

Mike Ferraro  18:03

your credit union is a perfect example of that. Right? I mean, look how advanced you are, you know, not sure your asset size, but you know, for maybe a smaller institution, you're leaps and bounds ahead of a lot of the community banks in that area in the DC area if you do an absolutely unbelievable job with all the different kind of FinTech and technology that you have in place to credit. So

Jon Rhodes  18:23

thank you. I'm not sure that's completely true, but I think

Sarah Cooke  18:27

one I just talked to a couple of your guys about your, your personal loan app too. So I'll link to that from this video as well. So um, yeah, I think you guys kind of breeze through some of my questions right there. So let me see if we really want to call this out though. What would you tell your first time homebuyer self? Now?

Jon Rhodes  18:55

Actually, don't listen to my ex wife

Mike Ferraro  19:04

I would honestly say that that's an interesting question Sarah, by would say talk to someone you trust. Because you know like when I got my first home I relied let's be honest, a lot on the realtor. The realtor steered me when I had a question I call the realtor right the realtor was the one by my side finding the home and the realtor a lot of times had their best interest in it, meaning flipping me to other financing sending me their their friend Joe right to get the loan, so on and so forth. I didn't know what points were right, so on and so forth. I was just trying to get my home. So I really tell myself, I need to find someone a credit union or a trusted advisor that would have my best interest, right that could be honest with me and walk me through not just someone who wants to sell the house make as much money as possible. And I felt when I was going through that that was really top of mind for A lot of people I talked to,

Jon Rhodes  20:00

and what makes borrowers trust you, when you give them hard data? Yeah, right? That when you give them calculations, you give them hard data, then they can check on you. They can make sure that you are what your strategies work, their rights and everything. And home turn, it gives them hard data they can look at, they can test they can take to somebody else they can take to their parents will say, Does this make sense? And it's a wonderful way to build trust. Right point.

Sarah Cooke  20:29

Yeah, that way your human people, your human people, you're hearing human tools, your human resources, have more time to be human with those people who when they do come in, so yeah, I love the way technology is like a great equalizer. I think it's more than an equalizer for guardians, because you've got that people helping people philosophy, then not every bank does.

Jon Rhodes  20:51

Exactly. Very true.

Sarah Cooke  20:55

So yeah, so we've talked a lot about what it does for the consumer on the front end, the potential borrower on the front end. What is it? What does it offer for the credit unions on the back end? The home journey? Well,

Mike Ferraro  21:09

go ahead. Go go please. Well,

Jon Rhodes  21:11

what we like is it's branded in it in our name. And it has our people on the app that they can talk to about some questions they might have on the app, not only do we have a mortgage officer on our app, we have a real estate agent that we trust on our app. So they are able to interact with people about the information they find when they're they input their data, and the calculations are performed. So it keeps the credit union in mind, and it keeps them remembering that the credit union is what gave them this data that's going to help them with their knowledge, and that we are going to be someone to work with in the future.

Mike Ferraro  22:04

John, it's all said I'll piggyback off that. So let's just go back six months ago, years ago, right? Let's say I'm a first time homebuyer, I even did a first time home buying seminar, right? And I listened to it maybe on Zoom, right? What do I do that? If you don't follow up with me, right all the time, or me follow up with you, I might go somewhere else, right out of sight out of mind. Right? The app keeps it sticky. The app is a way for me to constantly continue to have your credit union top of mind. So when I'm ready to apply, I can come back to you. If I have questions, I can email you and set up an appointment right within the app. If you don't have that, you just have to rely on hoping right? That I remember.

Jon Rhodes  22:53

And when the future borrower reaches certain milestones, as long as they agree to share this information with the credit unit, the loan officer, the mortgage officer knows they've reached these milestones. They're ready. Yeah, you know, this is the time to contact them.

Sarah Cooke  23:10

Yes. Right people right time. Yep.

Mike Ferraro  23:12

All right. We said, Sir, to my staff, you know, I get really here. If you don't follow up, you know, with someone who's interested, how are you going to know? Right, and so I can only rely on my staff, so long as they're working with members throughout, you know, the entire mortgage area right refinances. At least with the this app, we can get reporting to right on the back end. So I can give John all the people that logged in when they log in, and then they could follow up to it's it's really intuitive like that, it really is.

Sarah Cooke  23:44

And so, John, what's been your experience? What's been the members response? Do? You know,

Jon Rhodes  23:49

we really this is, so do a members are really excited about it, and they're doing it and members are loving our interaction with them at the time when they so choose. So they're, they're very happy, but we haven't had a lot of closings yet, because we found a lot of our members need time to prepare to buy a home. Yeah. They're not ready. This is telling them and what we're doing with, you know, instead of turning them down for a mortgage and giving them no, you know, reason why we're giving them the way to be approved. And so we're showing them the way to be approved and are working toward getting to the point where they can handle the financial responsibility of a mortgage,

Sarah Cooke  24:39

which is better for them as well as the credit union obviously. Yeah, but Yeah, they'd rather not lose their home either. Yeah, I'm so Okay. A great discussion. Y'all appreciate your time. I'm gonna give you each an opportunity to provide your final thoughts. What was the last Last bit of wisdom you want to impart on our credit union executive audience.

Mike Ferraro  25:03

John, you start go ahead.

Jon Rhodes  25:06

All right, I hope the commander's find a football coach that can help us win some games and get to go Belichick. Go Belichick. That is my first thought. My second thought is, this is a way to get new members, not only is this a way to help your current members, but this is a way to reach young people who want education from a source. That's impartial. It's looking out for their best interest and at their fingertips. Right. Yeah, right at their fingertips, or Mike.

Mike Ferraro  25:39

Yeah, no, listen, guys, you know, as leading this CUSO working with a lot of credit unions, I really wanted to find a way for us to differentiate ourselves with our partner credit unions, right? I don't want to be just one of these CUSOs that takes applications, right, encloses loans and sends them back to chat, right? And so on and so forth. Give me a niche, what can I really do to dig in to help John with the membership, and that's where this app really helps. And it's not just refinances and 30 year mortgages, it's specifically first time homebuyers in this instance. And that's where this app comes into play. And it's available for all of our partners in John, as John mentioned, it's branded in his name. Now as soon as members log in, they log in right under fed financial and communicate back with the credit union. So I'm really passionate about finding different tools, kind of in the tool bag to give our partners just not just the traditional ones.

Sarah Cooke  26:33

So yeah, now white label is so important. Yeah. to brand themselves, because that's who the member trusts. They don't know who you know, they don't know more mortgage market key. So So anyway, thank you, gentlemen, so much for your time. Appreciate it. Mike And John, have enjoyed the rest of your day.

Mike Ferraro  26:52

Thank you so much. Bye, guys. Thanks, John. Thanks.